Gold Setting Up For Epic Repeat Bull Run

Back in 2008 following the collapse of Lehman Brothers and the financial disaster that followed, gold bottomed around the $680/oz level, then went on a three year tear before finally topping around $1920/oz. For those chartists amongst us, there is a very similar pattern following these events in Gold and other markets.
 
If we look at the fundamentals that drove this price action back in 2008 they are not that dissimilar to today. Lack of liquidity in the markets, sell off across all sectors, fear on the streets, inflation, reckless lending, late Fed action, the list goes on. Today’s situation is worsened with poor supply chains, global shortages of materials and way more leverage in the markets (the latter courtesy of The Fed)
 
When we consider gold’s recent price action from its recent highs of circa $2060/oz to dipping below $1800/oz, it is curious to question why when the fundamentals all point to higher prices. However, since markets peaked near the turn of the year Bloomberg reports that some $7.6 trillion has been lost across NASDAQ alone. In comparison, the COVID sell off was $4.4 trillion. With gold knocking on the door of record highs only a month ago, it is highly likely this price decline to today’s levels has been profit taking and/or margin calls to cover huge losses experienced. Gold and silver are always susceptible to heading south during wider market sell offs.
 
The NASDAQis in bear market territory having experienced over 25% decline since its all time highs. The S&P 500 has flirted with a 20% loss but since rebounded from critical levels. Whilst the decline has taken four months, it isn’t crash hallmarked. Classic sideways to bear market action is decline by 10% then bounce up 5% and repeat. Much the opposite of the buy the dip mentality as the sell the rally becomes the momentum trend.
 
On the May 16 gold touched $1775/oz before impressively turning around and setting up for what could be a major closing price reversal bottom. Closes above $1850 would confirm this.
 
Back to the 2008 comparisons, gold rallied over three years roughly 180%. Assuming yesterday’s price action is the major bottom, using these metrics would put gold around the $5000/oz level if we see the same sort of bull run. With the gold/silver ratio at illogical highs right now, using the metrics of 2008 when silver bottomed at around $8.6/oz and topped just under $50/oz would give silver a price target of £120/oz. That puts gold/silver ratio at just under 42 which is nowhere near the historical lows. Silver could go much higher.
 
So what needs to happen on the macro front for this to occur? The simple answer is The Fed. When they reverse course to save the markets (and they will) and inject liquidity into the system again it will be at the expense of the dollar. What would also help is the manipulation of metals needs to end, and this will only happen when gold is needed to go higher which it will. The latter two points didn’t happen in 2008-2011 and we say a 180% increase in price with gold. Money rotating out of stock markets and going long into commodities will ruin the shorts just as it did in 2008-2011.
 
Could this be a little bit of history repeating? Don’t forget the miners either – they are looking very good value at present.